The path exploration for RWA that can generate maximum value and is most suitable for us must be a combination of mainland assets + data compliance for outbound transactions + raising overseas funds, ensuring that assets are controllable, data is trustworthy, and funds can be raised.

As 2025 begins, Hong Kong has already released two "explosive" news items. First, Huaxia Bank has launched the first retail tokenized fund in the Asia-Pacific region in Hong Kong (click on Crypto Salad's article "The First Retail Tokenized Fund in the Asia-Pacific Region Lands in Hong Kong! Web3 Lawyers Explain the On-Chain Innovation of Fund Tokenization and the Future of RWA" for more details); second, the Hong Kong Financial Secretary announced that the second "Hong Kong Virtual Asset Development Policy Declaration" will be released soon, further innovating how traditional assets can better integrate with virtual assets.

These two positive news items are seen by many as a representation of the compliance of RWA projects. At the same time, combined with the news that the first RWA project in the mainland agricultural sector—"Malus Grapes"—was successfully launched and raised 10 million at the Shanghai Digital Asset Exchange, RWA tokenization seems to have completed its transformation from "concept" to "implementation." Therefore, whether on the asset side, intermediary service side, or primary investors, there has been a flurry of related activities recently, with numerous discussions and project inquiries almost every day.

During this time, Crypto Salad has received a large number of landing demands from project parties, covering a wide range of underlying assets, including bonds, gold, rare metals, non-performing assets, agricultural products, property rents, bulk commodities, digital copyrights, fan economy, and more…

As the validation of various projects deepens, every project party ultimately returns to the starting point, constantly asking themselves:

Is my project suitable for RWA?

If my project is not suitable for RWA, then what kind of project is suitable?

What are the requirements for underlying assets in RWA? Can all types of real assets be included?

What kind of token am I issuing? Is it a worthless token?

If it is not a worthless token, do people in the crypto space have the motivation to speculate on assets and rights that are physically anchored (with relatively fixed value)?

…

Today, Crypto Salad will attempt to analyze these questions based on our practical experience.

First, a conclusion: The path exploration for RWA that can generate maximum value and is most suitable for us must be a combination of mainland assets + data compliance for outbound transactions + raising overseas funds, ensuring that assets are controllable, data is trustworthy, and funds can be raised.

### 1. How to Understand RWA?

First, we need to clarify the definition of RWA. RWA stands for Real-World Assets Tokenization, which means packaging and storing the intrinsic value, operation, revenue, and other data of various assets in the real world on the blockchain, forming digital tokens (i.e., digital tokens), and then issuing financing to trade on-chain with investors.

Many enterprises are attracted to the "delicacy" of RWA financing, so let's first discuss what characteristics RWA has in financing.

Since RWA involves a "tokenization" process similar to the "securitization" of assets, and also includes the ICO (Initial Coin Offering) of tokens, which is similar to an IPO (Initial Public Offering), we can compare them.

1.1. Focused on Underlying Assets

The biggest difference between the two is that RWA focuses on underlying assets rather than being based on non-existent air; we can call this type of token an Asset-Backed Token (ABT).

Since it focuses on underlying assets, it means that its financing behavior does not revolve around the credit of the entity but relies on the assessment of the value of the underlying assets. Therefore, whether a company is profitable in the long term is not the most critical factor for RWA. As long as a certain batch of assets owned by the company has value and potential, that batch of assets can be packaged and put on-chain for financing. This undoubtedly brings more imagination and possibilities to enterprises.

What types of assets are suitable for RWA?

From the effect of asset tokenization, RWA projects are tailor-made for high-value, high-quality projects that need to improve liquidity and lower investment thresholds. Some project types that are relatively easy to accept and understand include:

• Stablecoins: Issued with support from fiat currencies or cash equivalents, such as the earliest digital dollars USDT and USDC, which can be considered the most successful RWA projects on the market.
• Bonds and Stocks: Tokenizing traditional financial assets like bonds and stocks to improve liquidity and market access, such as USYC backed by U.S. Treasury bonds.
• Real Estate: Lowering the investment threshold for real estate through tokenization, such as RealT.
• Commodities: Physical assets like carbon credit certificates and precious metals, for example, PAXG, which is anchored to gold.

1.2. Financing Speed

RWA leverages blockchain technologies like smart contracts to digitize the entire financing process on-chain, resulting in structured and standardized data, making data a standardized product. From asset evaluation, token issuance to fund raising, combined with the public transparency and on-chain traceability of blockchain, the speed of financing can indeed be greatly enhanced.

1.3. Asset Liquidity

RWA tokenizes, fragments, and internationalizes these real-world assets through blockchain technology. For example, a house worth 50 million may be unaffordable for most people, but if the house is divided into one million fragments, everyone can afford to buy a piece. It's like putting "wheels" on the assets of enterprises, allowing them to flow quickly in the market. Better liquidity provides every investor with the possibility of quick exits, making them more willing to invest.

Although a token can represent a fraction of a house, whether it's one in hundreds of thousands or billions, this difference will be influenced by the emotional fluctuations of the secondary market, but there exists a relatively stable benchmark, which is the house itself, i.e., the value of the underlying asset.

### 2. Challenges Faced by Enterprises in RWA

Since the benefits of RWA are so enticing, why are there still so few examples of mainland enterprises successfully implementing RWA? Crypto Salad has summarized the two main challenges that enterprises commonly face from practice:

2.1. Compliance Challenges

RWA tokenization naturally involves "tokens," but mainland China explicitly prohibits virtual currency financing trading platforms from exchanging, buying, or selling virtual currencies or providing pricing services. This is why compliance has a very high priority in RWA projects.

According to the "Notice on Further Preventing and Dealing with Risks of Virtual Currency Trading Speculation," Article 3 states:

Virtual currency-related business activities are considered illegal financial activities. Engaging in the exchange of legal currency for virtual currency, exchanges between virtual currencies, acting as a central counterparty to buy and sell virtual currencies, providing information intermediary and pricing services for virtual currency trading, token issuance financing, and virtual currency derivatives trading, among other virtual currency-related business activities, are strictly prohibited and will be resolutely banned according to law. Those who engage in related illegal financial activities that constitute crimes will be held criminally liable according to law.

Therefore, mainland enterprises must plan a complete compliance path to achieve RWA.

Tokens cannot be issued within China; the underlying assets can be either domestic or overseas. The entire project can link domestic and overseas operations or be conducted solely overseas to meet the compliance requirements for token issuance.

For cross-border projects, the first step that cannot be avoided is asset financialization.

Since RWA projects must interact with the regulations of various jurisdictions, if enterprises do not link their products with standard products (stocks, bonds, shares), it will affect their legal rights. In the context of global digital regulation being imperfect, the legality of RWA relies on its adaptation to traditional legal frameworks. If not linked to standard products, it cannot leverage existing legal infrastructure to reduce regulatory friction and ensure the effectiveness of legal rights. Therefore, only after asset financialization can enterprise assets be tokenized through smart contracts.

2.2. How to Attract Investor Interest?

After token issuance, how to generate value and make people willing to pay for it is a real pain point and one of the most common questions enterprises consult Crypto Salad about.

To deeply understand this issue, let's first learn some knowledge about digital currencies.

First, can you explain the differences between mainstream coins (like BTC), altcoins, worthless tokens, meme coins, and others?

These coins have subtle differences in nature, but they mainly differ in their underlying mechanisms:

Mainstream coins, such as BTC, use a PoW (Proof of Work) mechanism to compete for computing power, while ETH has transitioned to a PoS (Proof of Stake) mechanism, reducing issuance costs. Entering the Web3 era, the technical barriers and costs of issuing tokens have further decreased, leading to standardized protocols like Ethereum's ERC-20, allowing token issuance to be completed quickly through code templates. The past year of 2024 was a typical era of worthless tokens flooding the market, with many tokens deployed on Solana and Base chains.

It is evident that issuing tokens in the Web3 world is not difficult.

So, if issuing tokens is not hard, is listing them on exchanges difficult?

Crypto Salad tells you that it is not difficult either; at least achieving on-chain circulation is not hard. However, if enterprises want to complete the listing on exchanges (referred to as "listing"), it is best to list on a mainstream exchange, which can be a bit challenging. But from our experience, a token with sufficient influence is likely to be actively listed by mainstream exchanges, while a relatively less influential token can also complete the listing if it passes the listing compliance review.

However, since the issuance of licenses for compliant virtual asset exchanges in Hong Kong, enterprises have focused on these licensed compliant exchanges, and how to seize the opportunity to list on compliant exchanges has become the most concerning issue for enterprises.

Here, it is necessary to carefully define a concept: what exactly do we mean by compliant exchanges?

Crypto Salad believes that compliant exchanges are those that have obtained virtual asset trading licenses under the regulations of their registered locations. There is also a potential category of "compliant exchanges," which refers to exchanges in jurisdictions that maintain a neutral stance on virtual asset regulatory policies and do not crack down on virtual asset-related businesses. From the perspective of "what is not prohibited by law is permissible," these exchanges cannot be classified as illegal trading platforms. Of course, under the push of governments around the world, led by the United States, the global regulatory framework for crypto is becoming clearer, and the definition of "compliance" will become increasingly precise in the future.

At this point, we have resolved the technical issues of token issuance and the issues of listing on compliant exchanges. Thus, the tokens in RWA projects have finally arrived in the secondary market, ready for circulation. This brings us back to the initial question of this section: who will invest in such tokens?

Investors willing to purchase RWA tokens need to meet two prerequisites: motivation to buy + being (overseas) qualified investors.

In the Web3 world, the value of tokens is determined by their working principles, such as the method of token generation, token economics, and circulation volume, among other factors. Most buyers entering the Web3 market are looking for "thousandfold tokens" or "hundredfold tokens." A recent example is the Trump token, which saw a maximum increase of 800% in just a few months. Ultimately, it is just a worthless token with no fundamentals and is difficult to value, driven solely by the emotional fervor of players.

In contrast, in RWA, tokens are anchored to assets. The value of the assets is relatively stable and cannot experience wild increases of a thousandfold or hundredfold. If someone is willing to pay for RWA tokens, it is likely because they recognize the inherent high value of the tokens. Achieving this can only rely on the underlying assets themselves. At this point, we find that when tokens are linked to assets, it somewhat contradicts the popular token dynamics in the current Web3 world. The appreciation potential of RWA tokens is limited, and investors will only enter the market if they are interested in the assets themselves.

Furthermore, under the premise of compliant secondary circulation, exchanges generally have entry requirements for investors, aiming to protect them. For example, the tokenized fund issued by Huaxia Bank is only available for purchase by investors in Hong Kong.

Meeting the conditions of (overseas) qualified investors while being interested significantly reduces the range of potential investors.

### 3. How to Implement RWA Projects? What Preparations Should Enterprises Make? What Can Crypto Salad Do for You?

1. Initial Screening of Feasible RWA Projects

In practice, we find that many enterprises are only interested in RWA projects, believing they have assets that can achieve RWA, but they cannot articulate what the planning for the underlying assets is, and they may not even have a good understanding of their own asset situation.

Using a somewhat inappropriate analogy, it's like a child wanting to study abroad; before parents look for an agency, they should first fully understand their child's situation, determine a preliminary study destination and budget, and then match it with the agency's resources to discuss the probability of success.

Therefore, enterprises should first comprehensively understand their asset situation, finalize the underlying assets, and ensure that the underlying assets are linked to the enterprise's operations. This places higher demands on the enterprise's professionals, as they must have cross-disciplinary talents who understand enterprise operations, the highlights of the enterprise and its assets, and the dynamics of Web3. Before launching a project, enterprises must recognize that RWA is a comprehensive project that spans across industries, finance, and digital realms, requiring "well-rounded" talents.

2. Prioritize Technology and Compliance, Address Dual Risks Upfront

Once the initial screening is complete, the Crypto Salad team will work closely with the enterprise leaders to deeply study the RWA plan. This includes designing the token economic model, developing the technical architecture for token issuance, methods for data collection, cost and timeline assessments during the process, and compliance pathways, among other aspects. Due to the differences in enterprise nature and assets, compliance requirements for commodity operations and circulation vary across regions and countries, as well as legal regulations. We help enterprises prioritize technology and compliance, addressing dual risks upfront.

3. Project Execution and Completion of Primary Market Fundraising

After the plan is completed, the project moves into the execution phase. The core goal of the Crypto Salad team at this stage is to assist enterprises in executing the project. This specifically includes conducting in-depth due diligence, writing white papers, developing and deploying smart contracts, and preparing a full set of legal documents, as well as connecting with resource providers throughout the RWA project process. Ultimately, the project party will achieve asset tokenization.

4. Listing Planning, Secondary Market Circulation, and Subsequent Operational Management

At this stage, we need to make subtle adjustments based on the policies at that time, the needs of the enterprise, and changes in investors to help the enterprise complete secondary market circulation. Our overseas partners are familiar with various licensed exchanges and mainstream exchanges. Additionally, as a Web3 legal team with long-term experience in providing financing services for Chinese enterprises, we will customize investment and financing legal documents for enterprises, keep them updated on regulatory policy changes, and provide dynamic compliance adjustment plans.

5. Community Engagement and Promotion, Serving as Ongoing Comprehensive Consulting Advisors for Enterprises

Generally, at this stage, enterprises need support for community operation plan design and execution, including establishing brand communities, configuring community management tools, and localizing multilingual content; they need to connect with media and KOL resources and adjust communication strategies accordingly. Enterprises need to monitor and optimize operational processes, such as regularly reporting on asset tokenization rates, utilizing token release and burn mechanisms, and implementing market value management strategies.

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